China's $32 Trillion Debt Bubble Could be The Black Swan to Crash The Global Economy The Chinese economic downturn comes as no surprise to global analysts. As outlooks are adjusted accordingly, it isn't the country's profit margins that are causing concern, but the decades of spending on unfinished building projects that have created a deluge of bad debt for China. China was a (domestic and international) debt-free country in 1975. Up till ten years ago, China's economy relied exceptionally little on debt. But China lost its debt hindrance in late 2008 when the global financial crisis erupted. With growth slowing sharply and 20 million people losing their jobs overnight, the government unleashed a giant stimulus that was powered almost totally by bank loans. The debt genie was out of the bottle -- and it has been challenging since then for China to stuff it back in. Opening the credit floodgates saved the Chinese economy after the global financial crisis. The government cannot disengage the country off this debt dependence. China’s total debt — corporate, household, and government — grew to over 300% of its GDP in the first quarter of 2019. China’s debt-to-GDP had bubbled to more than 300 percent from 160 percent a decade ago. It is causing many analysts, including Chinese officials, to warn of a financial-sector debt bubble that’s waiting to burst. Debt scratches at a level 6 with deeper grooves at a level 7. China is now very much past the tipping point where the debt simply no longer can be ignored. The cost of servicing the debt simply diverts from almost everything else. And there’s a whole host of hidden debt in China, which had kick-started stimulus this year as its economy slowed. The trade war has put a dent in efforts to pare the gargantuan debt as the Chinese government sought ways to boost the slowing economy, which was at its lowest growth in 27 years this year. As China tries to move away from export-led growth to domestic-led growth. Debt levels in China quickly soared vertiginously a few years ago as the banks extended record quantities of credit to drive growth, which led to the second world economy undertaking deleveraging efforts, or the process of reducing debt. China's economy relies on too much debt. And the enormous boom in credit risks, potentially leading to a new financial crisis. The country's debt has grown expeditiously since the global financial crisis. China's economy is based on a shadow banking and Ponzi scheme. China's enormous infrastructure spending was often invoked as a model for the US. But with debt piling up, Beijing must juggle ever-more furiously to maintain appearances. China has 64,000,000 empty apartments. All those empty apartments which were made in the hopes that the value of the land would increase overtime AND that people would rent them out. But I am assuming none of that is happening, and that they are losing a lot of money. China's corporate debt is another huge problem too. Companies in China owe more than the economies of the UK and Netherlands combined, and that could have repercussions for the world economy. The Chinese Debt mountain has escalated from Virtually zero in 2000 to over 35 Trillion USD in 2018. That means each Chinese owes $20,304 when china's minimum wage is $1.60 per hour. Over 80% of china's debt is held by the National and State Chinese Banks. And they know full well that as a large chunk is in Western Business, then it is un-repayable. So the only resolve is massive Global financial meltdown or Debt forgiveness. And that is the exact horse that the Chinese and US are riding. Deutsche Bank has recently climbed aboard. In that Central Banks, many of which are over 60% Leveraged; will have no alternative if wanting to avoid Global Fiscal meltdown on Fiat currency that Debt Forgiveness and Printing even more Paper are the only tools left with most economies at 2.5% growth or lower. You can not taper a Ponzi scheme in that Compound interest repayment is unsustainable in low growth economies. US Bond market is now inverted. The 2008 financial collapse has never been dealt with. And now all that Toxic debt with its new mates is falling out the cupboard it was hurriedly stuffed in all over again. China's problems and our problems are the same. We had big credit cards, and they had cheap labor. They grew we went broke. Then they tried to keep the party going by going in debt themselves. China's debt, both public and private, is now far higher than that of the U.S. as a percentage of the economy. And even that is based on falsified growth numbers. China's money is fleeing to America because wealthy Chinese, the insiders, know where all this is headed. A recent survey showed that 50% of wealthy Chinese want to move to the US. What do they know that we do not? China is in a Massive Debt Bubble! China is on the verge of economic, ecological, demographic, and social collapse. But when China's economy crashes, then the USA would collapse the next day . China holds $1.2trillion of US Treasury. China is one of biggest debt bubbles in the world, Is this going to be the domino that can bring down the global economy? Welcome to The Atlantis Report. China, of course, has been the poster child for increasing debt post-financial crisis. China's economic growth has decreased to an almost three-decade low. The latest quarterly figures show the economy increased by 6.2 percent. That is the kind of growth some countries would die for, but in China, it's the worst result since the early nineties. But many experts claim that real growth must be near 2%. The official figures of the government don't add up since when they combine the growth rates of all provinces; one whole province seems to be missing. Also, the official growth doesn't correspond to what key sectors of the economy indicate, like consumptions of electricity, bank loans, and real estate. So 6% is overly positive. All economic factors point towards a recession or even depression in the near future, but China likes to lie about and inflate a lot of their numbers. China has 300% REAL debt to GDP. China doesn’t even have enough DOLLARS to pay its DOLLAR-DENOMINATED debt. They have desperately been trying to repatriate dollars via asset freezes and state-owned companies via corporate debt to avoid being labeled a currency manipulator (their only other way out). Look at the daily swift flows. Yuan is less than 1%. They have huge problems looming, let’s hope they figure out how to do something about it for the sake of the billions of people living there. China's real growth has been 1-2% for the past three years. As in the Soviet Union, all figures by the local government are exaggerated, so that they keep their jobs. (That's the nature of socialism.) If you track energy use, which is a very good correlate of economic growth. The growth is only about 1%. There is not a single reputable economist in this world who believes the numbers that come out of China. China is opaque! No transparency! Never believe what China says but what China does. The reality is China is dollar poor and desperate because of how much dollar-denominated debt they have. Every tick of the US interest rate is like a gut punch. China is broke. It is hiding a foreign debt of $32 trillion. It has overproduced cement, steel, building materials; it wants to dump on other countries, who will pay for these to China in the future in terms of US Dollar. China owns very little US Dollar, that is the reason it has suggested to many countries that it will pay by Yuan, which is not a convertible currency. That means any country that will accept Yuan will have to import from China. This is a trick. One of the ways for the communist Chinese government to get out of it, is to continue to print more paper monies to cover and pay for current debts, as long as their foreign reserve, being the largest in the world in terms of amount, can be sustainable at present level, although technically speaking, the government is in bankruptcy in the face of the mountainous amount of internal and external debts. Once the country's export trade declines and earn less hardcore US dollars, or that it's domestic consumption are not able to generate enough growth momentum. We will be going to witness a catastrophic scale of economic disasters in human history! China’s debt is denominated in its own currency. This means Chinese debt can be fully managed by China’s banking regulators. Monetizing the debt” means to increase the money supply to evaporate the debt via inflation— this means they will, in effect, pay that enormous debt by slowly bleeding the monetary value of every Chinese andYuan holding person. This is the typical tactic of a destructive state and often leads to hyperinflation. This would be bad news for prospects in China since everything becomes more expensive, price-mechanisms no longer signal real investment, and the ppl have less to spend productively since they’re wealth is sipped slowly to pay for a gargantuan debt. It is a severe issue. Although 95% of China's debts are domestically held, household debt in tier 1 to tier 3 cities ranges from 150% to 135% of household income. This means households are overleveraged and overly indebted. On top of that, the property market bubble has cooled, bringing down the paper value of many speculative investments. Domestic consumption will be depressed for years to come as households deleverage and pay off their debts. The state-sponsored P2P credit bubble cannot shore up the flagging consumption. China has already followed in the footsteps of Japan and descended into its first lost decade. Some say second even. And it gets even worse. A few years from now, China will be entering its almost irreversible demographic demise. All China threats and yellow peril are clearly overblown. Once a country starts aging and ailing like China is about to, it's nearly impossible to recover; more so because China is slow to reverse the tide due to its size and complacency. The condition of the Chinese economy is more and more becoming a significant factor exorcising the minds of global policymakers. Despite the fact that China’s most recent data has shown signs of stabilization. And the current turmoil in the Chinese market will possibly provide more Chinese policy stimulus via further overinvestment. Which could perpetuate this Capex bubble in the short term. The world is still paying close attention to the gradual unwinding of the country’s historically unprecedented investment ratio of around 45% to GDP. That ratio (down from a peak of 55%) suggests that China is poised to embark on a powerful accelerator multiplier dynamic to the downside. Add to that ongoing dollar strength, which has inflicted further deflationary pressures on resource producers, most notably those who have borrowed dollars against declining resource revenues, all of which have put pressure on commodity prices. China's growth model has relied on credit-driven investment; led growth in the past decades. Its double-digit growth record has been nothing but impressive. However, this growth model has encountered mounting difficulties. And China today is wresting with a vexing problem with debt. A high-level debt, coupled with declining quality of debt, has rendered the private sector vulnerable, and yet, aggressive deleveraging could further decelerate the economy, producing a vicious “credit spiral.” So what are the numbers? China's debt to GDP ratio has reached 300% of GDP if financial sector debt is included. This level is rather unparalleled, although China’s long tradition of credit-driven growth. Since China’s market reform in the 1980s, State-Owned Commercial Banks, the backbone of China’s financial system, have lent generously to State-Owned Enterprises (SOEs) to finance the latter’s fixed-asset investment. Credit extension helped mobilize resources and support China’s industrialization and urbanization, thus engendering a Keynesian-Schumpeterian credit-investment-growth cycle. But this model has progressively run out of steam, as it causes debt accumulation, puts a heavy toll on natural resources, and generates rising supply glut in recent years. Chinese policymakers have realized the limitation of the growth model and called for rebalancing, shifting demand from credit-driven investment, and export to consumption. However, the rebalancing plan did not effectively bring about a reduction of debt. Instead, leverage heightens, and debt continues to accumulate. China is still a poor country with a billion mouths to feed, and most of the country still living in the countryside with no plumbing or modern amenities or infrastructure. China cannot produce their own food because they only have 10% arable land. China is about to have the biggest crash in world history. Debt can bring down Empires, learn from history China. This was The Atlantis Report. Please Like. Share. And Subscribe. Thank you.
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It's good that China collapses. It is retribution that they richly deserve. Sooner we can expect a brake down and then social unrest leading to balkanisation of the nation.
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